PMGKAY was unsustainable, move to end it is a step in right direction, says expert

Last week the government ended the PM Garib Kalyan Anna Yojana (PMGKAY). But it also said that it is merging the PMGKAY into the National Food Security Act (NFSA).

What does all this mean in terms of how much free or subsidised food the government is now providing? Until December 24, 75 percent of rural households and 50 percent of urban households got 5 kilos of rice or wheat or coarse cereals, under NFSA at Rs 3 per kilo for rice; Rs 2 per kilo for wheat and Rs 1 per kilo for coarse cereals.

From March 2020 in addition to the earlier 5 kilos, they got further 5 kilos of rice or wheat plus one kilo of dal free.

In total, before December 24 2022, eligible persons which is two thirds of Indians or 81 crore people got 11 kilos of grains at a maximum of Rs 15 per head.

After December 24, the PMGKAY ends and gets merged into NFSA. Under NFSA one person now get 5 kilos of rice or wheat or coarse cereals all free.

So it is 11 kilos at Rs 15 getting replaced by 5 kilos but fully free. Does this hurt the poor seriously? Does it impact cereal inflation? And what are the compulsions to discontinue the Anna Yojana?

In an interview to CNBC-TV18, Former Chief Statistician Pronab Sen said discontinuance of PMGKAY was the right decision as it was unsustainable.

“Discontinuance of PMGKAY was the right decision in my opinion as it was unsustainable. Had they opted to continue the government would have had to increase its procurement quite significantly and I don’t think that would have been a very good idea for agriculture in general. So I think it is a right decision,” Sen said.

Siraj Hussain, Senior Visiting Fellow at ICRIER and Former Secretary of Agriculture said economic surveys have been asking since years to bring down the food subsidy and to invest in agri tech sector.

“It is true that some people who are very poor will have to spend more to buy the grains but PMGKAY scheme was unsustainable. It was not possible for the government to distribute 110 million tonnes of food grains every year – neither desirable, nor fiscally feasible, nor physically possible to procure 110 million tonnes year after year. I don’t think we should be giving anything free at all but there is a need. In fact several committees of the government and the economic surveys year after year have been arguing that there is a need to bring the food subsidy down but for that we need much more data, consumption expenditure survey, poverty headcount and I do not know if Niti Aayog is prepared to do all that exercise and invite objections from certain quarters. So I do think that there is a need to save some money from food subsidy and invest it in agricultural research so that we find seeds and technologies suitable to withstand drought, floods, climate events etc,” said Hussain.